What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events.
Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
The American Recovery and Reinvestment Act (ARRA) of 2009 provides a COBRA premium reduction for eligible individuals who are involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.
Source: U.S. Department of Labor
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Dr. Gregory McDonald has an active dental practice in Springboro and a specialty as a forensic dentist.
Yet since January, health insurance coverage for McDonald and his wife has been subsidized through federal stimulus funds set aside for unemployed workers, records show.
McDonald, a Republican, is enjoying discounted COBRA coverage for Americans involuntarily terminated from their jobs from Sept. 1, 2008, and May 31, 2010, through the American Recovery and Reinvestment Act because he was defeated in the November 2009 election.
“The qualifying event was his termination by the voters,” Clearcreek Twp. Administrator Dennis Pickett said.
There is not a clearinghouse that tracks how many former elected officials in Ohio and other states have been taking advantage of the subsidized coverage.
Who qualifies?
Ohio has 937 cities and villages, and 1,308 townships in 88 counties.
Provided they meet federal criteria, “any one of our elected officials who is not re-elected is eligible for COBRA,” said Jody Lombardo, office manager for the Ohio Insurance Services Agency, the COBRA specialist at the agency managing health coverage for Clearcreek Twp. and local governments throughout Ohio.
Elected officials defeated during the time frame established by the law could qualify if their elected office was considered a full-time position, Lombardo said.
For example, elected officials are on call, 24 hours, seven days a week, “even though they might not have office hours,” Lombardo said.
Who signed up?
In Montgomery County, none of the trustees ousted in November elections in Butler Twp., Jefferson Twp or Washington Twp. sought the subsidized coverage, officials said.
Citing the Health Insurance Portability and Accountability Act of 1996, city of Dayton spokesman Tom Biedenharn declined to confirm if former city officials, including former Mayor Rhine McLin, were taking advantage of the subsidy.
After leaving office, McLin, a Democrat, said she was paying almost $500 a month for COBRA coverage before she learned of the subsidy in March.
“When I applied under the Obama plan, it dropped down to $149,” she said. “Especially then, I was unemployed, it made a big difference.”
McLin said she had no financial interest in her family’s funeral home business and no longer worked as a teacher. She said it was “like Christmas” when her insurer agreed to reduce her monthly rate and retroactively apply her February payments to latter months.
While her mayoral post was ceremonial and she had no set hours, McLin said she worked between 45 and 60 hours a week as Dayton’s mayor and earned about $45,000 a year.
“I took the job serious. I didn’t even have the opportunity to have another job,” McLin said.
She is now working as a paid consultant for the campaign to re-elect Ohio Gov. Ted Strickland. The campaign’s post-primary expenditure report notes McLin is paid $3,540 a month.
McLin said the subsidy was primarily for unemployed workers in the private sector. “Elected officials ended up being a byproduct, which was a good thing,” she said.
McLin said holding elected office was much the same as holding a job in the private sector.
“The fact is public service is a job,” she said. “The demands of it have changed ... .”
McDonald’s continued, subsidized health coverage — despite his dental practice and specialty as a forensic dentist — divides officials in Clearcreek Twp.
“I think it’s a shame the taxpayers are paying for a thriving dentist’s health care,” said township Trustee Cathy Anspach, who defeated McDonald in November.
Trustees Dale Lamb and Ed Wade said they believe McDonald is entitled to the subsidy.
“Dr. McDonald has done what he is supposed to do. We submit the bills, and we get reimbursed,” said Wade, who is the principal of the Ralph Wade Insurance Agency in Springboro.
How to qualify
According to township records, McDonald pays $400 toward a $1,201 monthly bill for medical, dental and optical coverage.
To qualify for the full, 65-percent subsidy, McDonald, McLin and others can earn no more than $145,000 ($290,000 if filing jointly). To qualify for a reduced subsidy, they can earn no more than $125,000 ($250,000 if filing jointly), according to federal guidelines.
McDonald said he was unlikely to exceed the income guidelines.
He said he decided to seek the coverage after being contacted by Infinisource, a company paid by the township to notified former employees about the opportunity for continued coverage.
“It’s offered. It’s legal,” he said.
McDonald said he offers no coverage through his dental practice and is doing what he can to avoid making layoffs at his office.
McDonald said he was unsure how difficult it will be to obtain other health coverage, due to his wife’s health problems, particularly with uncertainty about changes coming as a result of federal health care reform.
“The government offers money with one hand and takes it away with the other. It all comes out of the bottom line,” McDonald said.
McDonald noted current elected officials, including Anspach, who is a bar owner and landlord, are provided health coverage. “It’s all taxpayer dollars,” he said.
Pickett said McDonald was notified about the benefit by a township contractor, just like any other former employee. “Dr. McDonald was no exception,” Pickett said.
After learning of McDonald’s coverage, Township Fiscal Officer Linda Oda said she unsuccessfully sought an affidavit, covering the township in case the IRS determined McDonald failed to qualify for the subsidy.
In addition to income guidelines, McDonald could be disqualified if he could have qualified for another group health plan or Medicare.
“To the best of my knowledge, Dr. McDonald qualifies for this program,” Oda said. “At the end of the day, we don’t know if he qualifies.”
Referring to program guidelines, Pickett said the IRS would seek reimbursement from McDonald, not the township, if he was disqualified.
IRS response
IRS spokeswoman Jodie Reynolds cited a response published by the IRS in June 2009.
“Q. Is an elected official involuntarily terminated at the completion of his or her term of office if the official ran for re-election and was not re-elected?
A. “Yes.”
She said the IRS does not keep data on the number of former elected officials enrolled in the program.
COBRA’S purpose
While expensive, COBRA is an important benefit to offer, particularly in economic hard times, said Catherine Turcer of Ohio Citizen Action, a statewide consumer advocacy group.
“It’s hard to figure out the best public policy use of insurance,” she said. “It becomes much more expensive to the public when people are uninsured.”
However, the government needs to limit spending on public programs, particularly in times of tight government budgets, she said.
“We can’t follow every nickel down the road,” Turcer said. “We need to be really thinking about the bottom line. Is this truly necessary?”
Contact this reporter at (937) 225-2261 or lbudd@DaytonDailyNews.com.
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